Could I offer some perspective from outside the box? I have been teaching piano and entering pupils for exams for over 25 years and there have been plenty of times when a pupil hasn't done the work, and I have been genuinely fearful that any work they can do now will be too little, too late, and that they will fail. After some initial reserve, I am now very happy to impart these fears to the pupil/parent. This usually results in a shedload of work being done in the last week, and a scraped pass secured.
Of course, there are differences: there is not quite so much money at stake, for one. But the main difference is that you take a PPL exam when you're ready. With music exams you are entered about 2-3 months in advance, then once you get the appointment you're commited to that date. Despite this, I would still say that the direct, no-compromise approach is the most effective (and the most honest).